A group of firms including Goldman Sachs Group Inc, Microsoft Corp, Deloitte, and Cboe Global Markets Inc are joining a new blockchain system aimed at linking disparate institutional applications, potentially encouraging broader adoption of distributed ledger technology in financial markets.
Participants in the Canton Network, which will start testing some features in July, say the system offers better privacy and controls than currently available. At the same time, it will achieve a scale and standard appropriate for financial institutions, according to a statement released by the companies on Tuesday.
Other firms participating include Digital Asset, ASX, BNP Paribas, Broadridge, Deutsche Börse Group, Cumberland, Moody’s, Paxos, and SBI Digital Asset Holdings. The network will bind together blockchain apps that were created using Daml — a smart-contract language created by Digital Asset, the blockchain startup formerly led by ex-JPMorgan senior executive Blythe Masters and backed by some of the world’s largest financial institutions.
Banks and other large corporations have been developing and testing blockchain applications for years in the hope they can simplify and speed up some of their most complex processes.
Part of the effort has revolved around exploring ways to transform traditional securities, like stocks and bonds, into tokens on a blockchain. Others have focused on speeding up the trading and settlement of various assets or facilitating international payments. While various systems have been tested and some applications have gone live, such blockchain networks have yet to be taken up on a large scale.
Part of what’s holding the existing applications back is their inability to connect different blockchain systems built by various organizations, while at the same time allowing creators to retain the controls and privacy required in regulated financial markets, the network’s proponents said. As a so-called “network of networks,” Canton claims it can overcome this by allowing systems to work together without requiring the entities that run them to give up control.
This may also enable firms to link in systems that are separate in today’s market — for example, asset registries and cash payment systems, the statement said.
Growing Reach
Currently, Canton can connect existing applications built using Daml — such as Goldman’s Digital Asset Platform, a system for issuing assets on the blockchain — with Deutsche Börse Group’s D7 post-trade platform, the statement said. The network’s reach should grow as more applications are built using this coding language.
Systems like Canton are “a key building block for future digital and distributed financial market infrastructures,” according to Jens Hachmeister, head of issuer services and new digital markets at Deutsche Börse Group.
While the initiative has gained the support of around 30 firms, there have been several blockchain consortia in finance with high-profile participants throughout the years. Their level of success has varied.
Large blockchain projects in finance are complex: new technology must be deployed across numerous firms operating in regulated markets. The complexity has in some cases resulted in projects being delayed, paused, or scrapped. Most notably in November Australia’s main exchange operator ASX announced that it was reassessing plans to replace its settlement and clearing platform with a blockchain based-system that it had planned to build in partnership with Digital Asset.
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